So Long, Farewell...

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April 12, 2014 - 16:53 — Elizabeth Wright

This week Secretary of Health and Human Services (HHS) Kathleen Sebelius resigned her position from the Department of Health and Human Services. Most policy people in Washington are not asking, “why?” but instead are pondering “what took so long?” Sebelius has been secretary at HHS since the Affordable Care Act (ObamaCare) was written, passed by Congress, and signed into law. Her job was to implement ObamaCare.

On November 6, 2013, about a month after the disastrous healthcare reform roll-out, vulnerable Senate Democrats up for election in 2014 went to the White House to meet with President Obama. By all news accounts, the president heard an earful from the Senators about ObamaCare and its "train wreck" roll out. A week later, the Capitol Hill newspaper The Hill reported that, “furious congressional Democrats … expressed exasperation with the White House for its bumbling implementation of ObamaCare.” On February 7, 2014, House Democrats went to the White House again to complain. Rep. Carol Shea-Porter (D-N.H.) declared that some people should be offering their resignations because of the fiasco.

For the past six months, pressure has been building for Secretary Sebelius to resign. Certainly recent data from an AP-GfK poll showing ominous signs for the Democrats in the 2014 elections helped to finally push Sebelius out from behind her desk at HHS. Perhaps at-risk Democrats think the resignation will allow them to claim the Obama administration and their party are serious about fixing ObamaCare.

But there is no fixing of ObamaCare. Majority Leader Eric Cantor (R-Va.) said it pretty succinctly soon after Sebelius’s announcement in a tweet stating, “I thank Secretary Sebelius for her service. She had an impossible task: nobody can make Obamacare work.”

There may be another reason she was forced to leave at this time. While the administration can claim victory for a couple of weeks that it reached its goal of 7.1 million sign-ups for ObamaCare, more precise enrollment numbers will soon be released. If the enrollment numbers are not good, and many health policy wonks suspect that is the case, axing Sebelius may provide the scapegoat Democrats think they need.

Americans can expect some real data to come from the House Energy and Commerce Committee any day now. This committee, among other House committees, has repeatedly asked Sebelius for specific enrollment numbers such as how many people have paid their premium, how many were previously insured and uninsured, and what are the ages of the enrollees. The secretary has repeatedly said she did not know the answer in testimony before the House committee. As mentioned in my blog last week, it has long been suspected the secretary, or at least someone at HHS knew what the numbers were because according to news reports, the insurance companies were giving the agency the information.

Out of frustration, the Energy and Commerce committee asked insurance companies that are participating in the federal ObamaCare exchanges for the answers to their questions. While the deadline for the data was April 1, no doubt updates will be forthcoming because of the surge of people signing up for insurance the last few days of March.

Why does it matter what the enrollment numbers are? It will demonstrate how successful ObamaCare has been in getting the supposed previously 50.7 million uninsured Americans insured. If most of those that have found insurance through an ObamaCare exchange were previously insured and lost their policy because of the law’s mandates, then that would be a colossal disaster.

Having at least 40 percent of the enrollees to be the “young invincibles” is important to keep ObamaCare actuarially sound. This category is comprised of people between the ages of 18 and 34 that tend to be healthy and low consumers of health services. ObamaCare needs their premium dollars to pay for the older and sicker enrollees that will use a lot of healthcare. But recent data shows the young invincible are not enrolling. As of March 1, the figure was at about 25 percent. It is clear they know a bad deal when they see one.

While the administration likes to tout that 7.1 million have “signed–up,” for ObamaCare, until the first month’s premium is paid, the figure means nothing. Only paid premiums will determine whether someone is covered or not. An even more important number to track is how many continue to pay for their premium. After all, previously uninsured individuals may feel some obligation to pay their first premiums but if the monthly costs start to eat into their budgets and they know they have to pay thousands of additional dollars before insurance kicks in, they may decide it is cheaper to pay the fine.

The president has already found a replacement for Sebelius and that is current Office of Management and Budget Director (OMB) Sylvia Mathews Burwell. What kind of leader will she be? Perhaps her appearance before the Senate Budget Committee on March 5, 2014 may give a clue. CAGW and other budget hawk groups remember her refusal to admit that the president’s 2015 budget would spend $56 billion more than the spending caps allowed in the Bipartisan Budget Act signed into law on December 26, 2013. Expect similar obfuscation when it comes to getting answers about ObamaCare.

Many news reports have declared the Burwell will have an easy confirmation process before the Senate since she was already confirmed as OMB director by a vote of 96 to 0. But Michael Cannon of the CATO Institute points out in his recent blog that may not be the case. She will be the first Secretary to oversee the Independent Payment Advisory Board, better known as IPAB, a product of ObamaCare.

Starting in 2014, this presidentially appointed, 15-member board will have power to make decisions on how to reduce Medicare spending if it should rise above a targeted growth rate, not an improbability considering the rate that baby boomers are retiring. To do this, the board will decide how much providers will be paid within Medicare. In the past, the power to make changes to Medicare’s payment rates required Congress to act. But IPAB now has the authority to make the changes and Congress can only stop their decision by either coming up with another plan that cuts the same amount or overrule the board through a super majority vote.

While the law specifically states the board cannot “ration” care that is a distinction without a difference; if a physician must reduce the number of Medicare patients he or she treats because of reduced rates, seniors by default will have their care rationed.

Cannon notes the president has not appointed anyone yet to IPAB and if he chooses not to, then all IPAB’s power will fall to one person and that would be Ms. Burwell.

Also discussed in my blog last week was a soon-to-be-released Rand Survey Research Group study, which was hyped as great news in the L.A. Times because it proved that ObamaCare had led to coverage for millions of Americans. The study was finally released on Tuesday, April 8. While the survey found that 9.3 million gained health insurance from mid-September 2013 to mid-March 2014, most of the people surveyed found coverage through their employer or Medicaid. Some 3.9 million gained coverage through an ObamaCare exchange with only 1.4 million being previously uninsured.

In conversations with many policy wonks in the free-market healthcare policy arena, I found a lot of skepticism for RAND’s study results. In a nut shell, some say it is too small of a survey (2,425 individuals); has too large of a margin of error (3.5 million); believe that surveying the same people over a period of time will not be representative of the population as a whole; question the spike in employer insurance; and, believe it was hastily done.

Avik Roy writing in Forbes Magazine gives a good overview of the RAND study and says, “it’ll be interesting to see if others can replicate the finding that Obamacare is increasing the number of people with employer-sponsored insurance. If they can’t, then we’re left with underwhelming enrollment figures on the exchanges. Given all the media noise around the allegedly magical 7.1 million exchange sign-up figure, it’s worth pausing to note that it’s not at all clear how successful the exchanges have been at attracting the uninsured.”

Within the next few months, more studies and surveys will be taken and Americans will get a true measure of how well ObamaCare is working.